Naira Rallies as CBN Defends Local Currency with $66m
Exchange rates improved across foreign exchange markets as the Central Bank of Nigeria (CBN) spent $66 million to defend naira. According to data from the forex markets, the naira appreciated by 0.6% to N1,501.08 per US dollar at the Nigerian Foreign Exchange Market (NFEM) in the just concluded week, reflecting support from the monetary authority.
The naira rally was driven by increased foreign exchange supply from foreign portfolio investors (FPIs), international oil companies (IOCs), and the CBN market interventions.
iIn its investors note, AIICO Capital Limited emphasised that trading activity was robust, with transactions occurring within the $/₦1,490.00 to $/₦1,520.00 per US dollar range, saying naira will continue to trade at the current level.
By analysts’ consensus, the money pricing was majorly influenced by the CBN intervention. The authority intervened in the foreign exchange market, selling US$66.80 million to authorised dealer banks. The sustained FX sales to banks also bolstered FX supply to Bureau de Change.
Hence, the Naira gained ₦8.62 and ₦50.00 to close at $/₦1,501.08 and $/₦1,510.0 in the official and parallel markets, respectively.
The FX spread between the two markets narrowed to 0.59% from 3.33% the previous week, according to TrustBanc Financial Group Limited. Nigeria’s FX reserves level declined by USD300.11 million week on week to USD38.74 billion, marking the 6th consecutive week of decline
“We link this decline to CBN’s continued efforts to support Naira through USD supply to the commercial banks and BDCs,” Afrinvest Limited said in a note to investors.
In line with the CBN’s efforts to sustain carry trade opportunities and boost capital inflows, coupled with its ongoing market interventions, analysts at Cordros Capital Limited said they expect FX liquidity to remain adequate, supporting naira stability in the short term.
Oil prices dropped by 2% but remained flat for the week, as concerns over Russian supply disruptions provided support amid ongoing uncertainty surrounding a potential Ukraine peace deal.
Brent crude declined by $1.80 (2.35%) to $74.68 per barrel, while WTI fell $1.81 (2.5%) to $70.67. Meanwhile, gold prices dipped slightly as investors took profits from the previous session’s record high.
However, bullion was on track for an eighth consecutive weekly gain, fuelled by safe-haven demand amid concerns over U.S. tariffs. Spot gold edged down 0.1% to $2,939.63 an ounce after hitting a record $2,954.69 earlier in the week. #Naira Rallies as CBN Defends Local Currency with $66m FG Partners WIPO to Boost SMEs’ Global Competitiveness
